https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1239

Interspar Ltd v Arm Cement PLC (In Liquidation) (Civil Application E039 of 2025) [2026] KECA 1239 (KLR) (3 July 2026) (Ruling) Neutral citation: [2026] KECA 1239 (KLR) Republic of Kenya In the Court of Appeal at Nairobi Civil Application E039 of 2025 DK Musinga, P Lilan & JO Okello, JJA July 3, 2026 Between Interspar Limited Applicant and Arm Cement PLC (In Liquidation) Respondent (Being an application for stay of ruling and further proceedings pending the determination of the intended appeal from the ruling and orders of the High Court at Nairobi (Muteti, J.) delivered on 15th January 2026 in High Court Civil Appeal No. E007 of 2024) Ruling 1.Before this Court is a Notice of Motion dated 27th January 2026 brought under Articles 40, 43, 47, 48 and 164 of the Constitution of Kenya, sections 3A and 3B of the Appellate Jurisdiction Act, and rule 5(2)(b) of the Rules of this Court. The applicant seeks a multiplicity of orders which we reproduce hereunder:1.Spent.2.This Honorable Court be pleased to issue an Order of stay of execution of the default judgment and Decree issued in MILIMANI MCCC E3638 OF 2023 on 28th April, 2023 and any consequential Orders pending inter-partes hearing of this application.3.This Honorable Court be pleased to issue an Order of stay of execution of the Ruling delivered on 15th January 2026 as well as the Judgment delivered on 15th May 2025 in MILIMANI HCCA E007 OF 2024 and any consequential Orders pending inter-partes hearing of this application.4.This Honorable Court be pleased to issue an injunction restraining the respondent whether by itself, its administrators, liquidators, parent company, holding company, sister company, directors, advocates, servants, agents, employees or any person acting under their behest be restrained from proceeding with or continuing with execution, attachment, sale, auction and/or accessing the Kshs. 650,000 deposited as security by the appellant at Consolidated Bank and in the High Court pending inter-partes hearing of this application.5.This Honorable Court be pleased to issue a stay of any further proceedings in MILIMANI HCCA E007 of 2024 and MILIMANI MCCC E3638 of 2023 pending inter- partes hearing of this application.6.This Honorable Court be pleased to issue an Order of stay of execution of the default judgment and Decree issued in MILIMANI MCCC E3638 of 2023 on 28th April 2023 and any consequential Orders pending the hearing and determination of the intended appeal.7.This Honorable Court be pleased to issue an Order of stay of execution of the Ruling delivered on 15th January 2026 as well as the Judgment delivered on 15th May 2025 in MILIMANI HCCA E007 of 2024 and any consequential Orders pending the hearing and determination of the intended appeal.8.This Honorable Court be pleased to issue an injunction restraining the respondent whether by itself, its administrators, liquidators, parent company, holding company, sister company, directors, advocates, servants, agents, employees or any person acting under their behest be restrained from proceeding with or continuing with execution, attachment, sale, auction and/or accessing Kshs. 650,000 deposited as security by the appellant at Consolidated Bank and in the High Court pending the hearing and determination of the intended appeal.9.This Honorable Court be pleased to issue a stay of any further proceedings in MILIMANI HCCA E007 of 2024 and MILIMANI MCCC E3638 OF 2023 pending the hearing and determination of the intended appeal.10.The costs of this Application be in the cause.11.Such other and further Orders and directions as may appear to this Honorable Court just and convenient to grant in the circumstances.” 2.Before we pronounce ourselves on the merits of the application, we must express our displeasure in the manner the applicant has crafted some of the prayers sought. It is well known to the applicant’s advocate that this Court’s Rules do not provide for, and it has never been the practice of this Court to grant ex parte orders pending inter partes hearing of applications. We deprecate this mushrooming practice. 3.The dispute culminating in this application traces its origins to Milimani CMCC No. E3638 of 2022 in which the respondent, ARM Cement PLC (in liquidation), sued the applicant, Interspar Limited, seeking Kshs. 7,049,439.87 allegedly due and owing for cement and related products supplied on credit. The respondent pleaded that despite demand, the applicant had failed to settle the outstanding invoices and sought judgment for the claimed amount together with interest and costs. 4.The applicant entered appearance and subsequently applied for leave to file its defence and counterclaim out of time. On 29th September 2023, the trial court allowed that application and granted the applicant fourteen days within which to file its defence. The order expressly provided that in default of compliance, the leave granted would lapse automatically. The applicant did not file its defence within the prescribed period and instead filed its defence and counterclaim dated 5th June 2023 on or about 15th October 2023. Upon the respondent's application, the trial magistrate's court found that the applicant had failed to comply with the conditional orders and, on 18th December 2023 entered default judgment in favour of the respondent for Kshs. 7,049,439.87, together with costs and interest. 5.Aggrieved by that decision, the applicant lodged Milimani HCCA No. E007 of 2024 challenging the refusal to recognize the defence and counterclaim and the entry of default judgment. During the pendency of the appeal, the parties recorded a consent before the High Court on 18th April 2024. The consent provided, among other things, for preservation of the status quo pending the appeal, stay of execution of the default judgment, and that the applicant's defence and counterclaim dated 5th June 2023 and filed on 15th October 2023 be deemed as properly filed. The consent further required the applicant to deposit Kshs. 400,000 as security. 6.The appeal was heard and determined by Muteti, J. in a judgment delivered on 15th May 2025. The learned judge identified the appeal as one challenging the trial court's exercise of discretion in refusing to extend time and in declining to recognize the defence filed outside the fourteen-days period. The court held that extension of time is an equitable remedy and that a party seeking such relief bears the burden of satisfactorily explaining the delay. The learned judge found that the applicant had failed to provide a satisfactory explanation for filing its defence outside the period granted by the trial magistrate and concluded that the trial court had properly exercised its discretion. The appeal was consequently dismissed. 7.Following dismissal of the appeal, the applicant filed an application for review of the judgment. The applicant contended that the judgment contained an error apparent on the face of the record in that the court failed to appreciate and give effect to the consent order dated 18th April 2024, particularly the provision deeming its defence and counterclaim as properly filed. According to the applicant, the consent constituted a binding court order whose effect survived the dismissal of the appeal unless expressly set aside. The applicant further contended that the court had improperly visited upon it the mistake of counsel in filing the defence outside the period prescribed by the trial court, notwithstanding that the delay was only two days and that the defence and counterclaim disclosed triable issues. The respondent opposed the application, maintaining that the judgment correctly determined the issues arising in the appeal, and that the applicant was merely seeking to re-litigate matters that had already been conclusively determined. 8.In the ruling delivered on 15th January 2026, the learned judge considered, among other issues, whether the applicant had established a basis for review under section 80 of the Civil Procedure Act and Order 45 Rule 1 of the Civil Procedure Rules. Upon considering the parties' respective positions, the learned judge held that no error apparent on the face of the record had been demonstrated. The court found that the complaints advanced by the applicant challenged the merits and correctness of the judgment and effectively invited the court to reconsider issues that had already been determined. The learned judge consequently concluded that the matters raised were properly the subject of an appeal rather than a review application, declined to interfere with the judgment, and dismissed the application with costs. 9.Being aggrieved by the said ruling, the applicant lodged a Notice of Appeal dated 16th January 2026 signifying its intention to challenge the whole of the ruling before this Court. 10.In the present application, which is supported by the grounds appearing on its face and the supporting affidavit sworn by Tanveer Sodi, a director of the applicant company, the applicant contends that the intended appeal is arguable and raises serious questions of law. In particular, the applicant in the draft memorandum of appeal contends that the learned judge erred in law and in fact by failing to appreciate the legal effect of the consent order recorded on 18th April 2024, particularly the provision deeming the applicant's defence and counterclaim as properly filed; by failing to find that the said consent embodied orders of a final nature which could not be disregarded in determining the appeal absent an order setting it aside; by erroneously holding that the matters raised did not warrant review notwithstanding the alleged error apparent on the face of the record; and by upholding the default judgment and depriving the applicant of an opportunity to have its defence and counterclaim heard and determined on their merits. According to the applicant, these questions are neither frivolous nor idle and warrant consideration by this Court. 11.On the nugatory aspect, the applicant avers that execution has already commenced. It contends that following the dismissal of the review application, the respondent moved to execute the decree and has sought release of the monies deposited as security. The applicant contends that unless execution is stayed, the respondent will proceed to enforce the decree, which is said to stand at Kshs. 10,608,469.83 together with costs and interest. It is further contended that the respondent is in liquidation and has disposed of most of its assets and that, should the intended appeal ultimately succeed, recovery of any monies paid out would be difficult, if not impossible. The applicant further maintains that execution would occasion substantial prejudice by effectively extinguishing its defence and counterclaim for Kshs. 4,184,727.24 without a hearing on the merits and depriving it of an opportunity to ventilate what it considers to be bona fide triable issues. According to the applicant, unless the status quo is preserved pending the determination of the intended appeal, the appeal will be rendered nugatory and any eventual success shall be academic. 12.The application is opposed by the respondent vide a replying affidavit sworn by Ellam Kweya, the respondent's Assistant Credit Controller. He avers from the outset that the application is misconceived, legally untenable, and constitutes an abuse of the court process aimed at delaying the respondent's enjoyment of the fruits of a judgment that has been upheld both by the trial court and the High Court. 13.The respondent avers that the applicant was duly served with summons and afforded an opportunity to defend the claim, but failed to comply with the timelines and conditions imposed by the trial court. It is deponed that although the trial court conditionally set aside the default judgment and granted the applicant leave to file and serve its defence within a specified period, the applicant failed to comply with those conditions, with the result that the orders setting aside the judgment automatically lapsed. It is further averred that the subsequent appeal to the High Court was heard and determined on its merits,and that the judgment dismissing the appeal remains valid and binding. 14.It is further deponed that the applicant had previously indicated an intention to appeal against the judgment of the High Court before electing to pursue review. According to the respondent, there now exists two parallel appellate processes arising from the same matter, namely, an intended appeal against the judgment and a separate intended appeal against the ruling dismissing the review application. The respondent contends that having elected to pursue review to its conclusion, the applicant cannot use the present proceedings to mount a collateral attack on the merits of the appellate judgment. 15.The deponent further avers that the present application must be examined within the narrow confines of an intended appeal arising from a refusal to review. In his view, the only question capable of arising before this Court is whether the learned judge properly applied the principles governing review under Section 80 of the Civil Procedure Act and Order 45 of the Civil Procedure Rules. He depones that the applicant is improperly seeking to reopen issues that were conclusively determined in the appeal and to challenge the merits of the appellate judgment through an appeal arising from the refusal to review. 16.With regard to the reliefs sought, the respondent avers that several of the prayers are incompetent and fall outside the jurisdiction of this Court under rule 5(2)(b). He depones that this Court lacks jurisdiction to stay execution of the trial court’s judgment, as that judgment was not the subject of the notice of appeal presently relied upon. In any event, that it is only the High Court that could competently issue such an order and not this Court. He further avers that the ruling dismissing the review application is a negative order incapable of execution and therefore incapable of being stayed. According to the respondent, the applicant is also not entitled to injunctive relief or orders staying proceedings in the trial court and the High Court because such prayers have no nexus to the ruling declining review and extend beyond the scope of the intended appeal. 17.On the merits of the intended appeal, it is averred that the High Court correctly found that no basis for review had been established. He depones that the applicant failed to identify any self-evident error, omission, or mistake apparent on the face of the record, and was instead inviting the court to revisit the merits of the appellate judgment. He further avers that if the applicant genuinely believed that the consent order recorded before the High Court had finally disposed of the question concerning its defence and counterclaim, it ought to have pursued that issue during the hearing of the appeal itself rather than after judgment had been rendered. According to the respondent, the learned judge properly concluded that the matters raised were issues for appeal and not review. 18.The respondent also disputes the applicant's interpretation of the consent order of 18th April 2024. The deponent avers that the consent was entered into solely in the context of an interlocutory application for stay pending appeal and did not amount to a final determination of the parties' substantive rights. He depones that the consent neither set aside the trial court judgment nor conclusively reinstated the applicant's defence and counterclaim for hearing. According to the respondent, the applicant's contention that the consent embodied final orders capable of surviving the dismissal of the appeal is erroneous and contrary to the record. 19.On the nugatory aspect, the respondent avers that the applicant has failed to demonstrate that the intended appeal would be rendered nugatory in the absence of the orders sought. The respondent depones that no evidence has been placed before the Court to show that any sums paid pursuant to the decree would be irrecoverable, or that restitution would be impossible should the intended appeal ultimately succeed. It is further averred that the intended appeal arises from a ruling dismissing an application for review, which constitutes a negative order incapable of execution and therefore incapable of rendering the appeal nugatory. The respondent maintains that the applicant's allegations of prejudice are speculative, unsupported by evidence, and insufficient to satisfy the nugatory limb under rule 5(2)(b) of the Rules of this Court. 20.The respondent further avers that it is, in fact, it (the respondent) who stands to suffer prejudice if the orders sought are granted, contending that the dispute has been pending since 2022 and that the applicant has employed a multiplicity of applications, appeals and review proceedings whose cumulative effect has been to delay execution and deny the respondent the fruits of its judgment. According to the respondent, any further stay would prolong the litigation, occasion additional costs, frustrate realization of the decree, and continue the indefinite suspension of its right to enjoy the fruits of the judgment. The respondent therefore urges the Court to find that the intended appeal is not arguable, that the nugatory aspect has not been established, and to dismiss the application with costs. 21.At the hearing of this application, learned counsel Ms. Sheunda held brief for Mr. Osundwa for the applicant, while learned counsel Mr. Kisala held brief for Mr. Kimathi for the respondent. Both counsel elected to rely entirely on the respective client’s written submissions without making any oral highlights. 22.In the written submissions dated 20th February 2026, the applicant maintains that the intended appeal is arguable as it raises substantial questions regarding the legal effect of the consent order recorded on 18th April 2024, particularly whether the High Court erred in failing to give effect to the provision deeming the applicant's defence and counterclaim as properly filed and in finding that no basis for review had been established.The applicant further submits that the intended appeal raises the broader question whether a litigant should be denied an opportunity to be heard on the merits on account of a procedural default attributable to counsel. The applicant relies on Andrew Kiplagat Chemaringo v Paul Kipkorir Kibet [2018] eKLR, for the definition of an arguable appeal and for the argument that the issues raised in the intended appeal are not frivolous. 23.With respect to the nugatory limb, the applicant relies on Stanley Kang'ethe Kinyanjui v Tony Ketter & 5 Others [2013] KECA 378 (KLR) for the settled principles governing applications under rule 5(2)(b), particularly that the Court must consider whether the success of the intended appeal would be rendered worthless if the orders sought are withheld. The applicant further cites National Industrial Credit Bank Ltd v Aquinas Francis Wasike & Another [2006] KECA 333 (KLR) for the proposition that where an applicant expresses reasonable apprehension that a respondent may be unable to refund the decretal sum, the evidential burden shifts to the respondent to demonstrate its financial ability to make restitution. On that basis, the applicant contends that execution should be stayed because the respondent is in liquidation and recovery of any monies paid out would be uncertain should the intended appeal succeed. 24.On its part, the respondent vide written submissions dated 25th February 2026 reiterates that the applicant has failed to satisfy the twin requirements under rule 5(2)(b) of the Rules of this Court. Reliance is placed on National Disciplinary Committee of the Jubilee Party & 2 Others v Kioni & 5 Others, Civil Appeal (Application) E500 of 2024 [2025] for the proposition that the arguability and nugatory limbs under rule 5(2)(b) must both be satisfied before relief can issue. It is further submitted that the intended appeal is not arguable because the issues relating to the legal effect of the consent order were fully considered and determined by the High Court both in the judgment and in the ruling on review. The respondent further contends that, having elected to pursue review to its conclusion, the applicant cannot reopen the merits of the appellate judgment through an appeal arising from the refusal of review. Reliance for this is placed on The Chairman, BOG Highway Secondary School v Mmosi Moi, Civil Application No. 277 of 2005. 25.On the nugatory aspect, the respondent submits that the impugned ruling is a negative order dismissing an application for review and is therefore incapable of execution or stay. It is further contended that even if assuming, for argument’s sake, that a positive order exists, the applicant has failed to demonstrate that any success in the intended appeal would be rendered nugatory, particularly as no evidence has been adduced to show that the respondent would be unable to make restitution should the appeal succeed. The respondent accordingly maintains that the balance of convenience favours allowing it to enjoy the fruits of its judgment. 26.We have considered the application, the affidavits on record, the rival submissions and the law. It is now settled that for an applicant to succeed in an application brought under rule 5(2)(b) of the Rules of this Court, he must satisfy the Court on two limbs. First, that the intended appeal is arguable, that is to say, it is not frivolous and raises at least one bona fide issue deserving consideration by the Court. Secondly, that unless the orders sought are granted, the intended appeal, if successful, would be rendered nugatory. See Stanley Kang'ethe Kinyanjui v Tony Ketter & 5 Others (supra). The two requirements are conjunctive and both must be satisfied before the Court can exercise its discretion in favour of an applicant. 27.Before turning to the twin principles governing applications under rule 5(2)(b), we deem it necessary to make a brief observation regarding the record before us. Whereas the judgment sought to be reviewed bears the date 15th May 2025, the impugned ruling repeatedly refers to the judgment as having been delivered on 29th May 2025. Indeed, at paragraph 1 of the said ruling, the learned judge indicated that the applicant was seeking review of the judgment delivered on 29th May 2025. The same date is reflected in the notice of motion and the parties' affidavits and submissions. We are unable, on the material before us, to conclusively reconcile that inconsistency. Be that as it may, nothing turns on the discrepancy for purposes of the present application, the notice of appeal before us being directed against the ruling delivered on 15th January 2026 dismissing the applicant's application for review. 28.On the first limb of arguability, we are mindful that at this stage we are not called upon to make definitive findings on the merits of the intended appeal. It is sufficient if the applicant demonstrates the existence of a single arguable ground. Having considered the draft memorandum of appeal and the rival positions taken by the parties, we are satisfied that the intended appeal is not entirely devoid of merit. In particular, the applicant intends to challenge the learned judge's treatment of the consent order recorded on 18th April 2024 and the finding that the matters raised in the application for review did not disclose an error apparent on the face of the record. Without expressing any concluded view on those issues lest we embarrass the bench that shall eventually hear the intended appeal, we are satisfied that the applicant has demonstrated the existence of at least one arguable ground of appeal. 29.Turning to the nugatory aspect, we agree with the respondent that a substantial part of the relief sought in the application falls outside the ambit of this Court's jurisdiction under rule 5(2)(b). The notice of appeal on record arises from the ruling of the High Court delivered on 15th January 2026 dismissing the applicant's application for review. Yet, among the orders sought are prayers for stay of execution of the judgment and decree of the magistrate’s court in Milimani CMCC No. E3638 of 2022 as well as orders staying proceedings before the subordinate court. This Court's jurisdiction under rule 5(2)(b) is predicated upon the existence of a notice of appeal and is confined to the decision intended to be appealed from. In the circumstances, we have no jurisdiction to stay the judgment or decree of the magistrate’s court, nor can we issue orders directed at proceedings pending before that court. 30.We further note that the applicant seeks a stay of execution, not only of the ruling delivered on 15th January 2026, but also of the judgment delivered by the High Court on 15th May 2025. The record shows that following delivery of that judgment, the applicant elected to pursue the remedy of review before the High Court. That application was heard and determined on its merits, culminating in the ruling now sought to be impugned before this Court. The notice of appeal presently before us is directed solely against the ruling dismissing the application for review. 31.Section 80 of the Civil Procedure Act and Order 45 Rule 1 of the Civil Procedure Rules make it clear that the remedy of review is available to a person who is aggrieved by a decree or order from which an appeal is allowed but from which no appeal has been preferred, or from a decree or order from which no appeal is allowed. This statutory scheme contemplates an election between the remedies of appeal and review and does not permit a litigant to pursue both remedies in respect of the same decision. The record before us shows that following the judgment delivered on 15th May 2025, the applicant lodged a notice of appeal of even date signifying its intention to challenge that judgment before this Court. There is no evidence on record that the said notice of appeal was ever withdrawn. Notwithstanding the subsistence of that notice of appeal, the applicant thereafter elected to pursue review of the same judgment before the High Court. As this Court observed in Otieno, Ragot & Company Advocates v National Bank of Kenya Limited [2020] eKLR, the law does not permit a party to pursue review while simultaneously keeping open the option of challenging the same decision on appeal. Similarly, in William Karani & 47 Others v Wamalwa Kijana & 2 Others [1987] eKLR, this Court held that once an appeal is taken, review is ousted and the matters sought to be reviewed merge into the appeal. 32.In the present case, the applicant elected to pursue review of the judgment delivered on 15th May 2025 and that process was exhausted upon the dismissal of the review application on 15th January 2026. Having made that election, the applicant cannot now seek, through an appeal arising from the refusal of review, to obtain a stay of the substantive judgment or to reopen issues that were determined therein. The scope of the intended appeal before us is confined to whether the learned judge properly exercised his review jurisdiction and cannot extend to the merits of the judgment delivered on 15th May 2025. Accordingly, the applicant is not entitled, in these proceedings, to orders whose effect would be to stay, vary or otherwise undermine that judgment. 33.More importantly, the decision sought to be impugned before this Court is a ruling dismissing an application for review. Such an order is, by its nature, a negative order. It neither commands nor restrains the doing of any act. Save for the issue of costs, there is therefore nothing arising from that ruling capable of execution or of being stayed by this Court. It follows, therefore, that the principal relief sought by the applicant is directed at a decision that is incapable of being stayed. See Western College of Arts and Applied Sciences v EP Oranga & 3 others [1976] eKLR. 34.The applicant nevertheless contends that execution has commenced and that the respondent is in liquidation, thereby creating a risk that any sums paid out pursuant to the decree may not be recoverable should the intended appeal ultimately succeed. We are unable to agree. The decree sought to be executed does not arise from the ruling dismissing the review application. Rather, it flows from the proceedings in the subordinate court and the judgment of the High Court affirming the same. The requisite nexus between the impugned ruling and the relief sought is therefore absent. 35.The applicant further contends that unless the orders sought are granted, it will be permanently deprived of an opportunity to prosecute its defence and counterclaim. While that complaint may well form part of the substance of the intended appeal, it does not, in the circumstances of this application, satisfy the nugatory aspect. The issue before us is not whether the applicant ought ultimately to be permitted to prosecute its defence and counterclaim, but whether success in the intended appeal against the refusal of review would be rendered nugatory if the orders sought are withheld. On the material before us, we are not persuaded that such prejudice has been demonstrated. 36.In the end, although we are satisfied that the intended appeal is arguable, we are not persuaded that the applicant has satisfied the nugatory limb under rule 5(2)(b). Since the two limbs must be established conjunctively, the application cannot succeed. 37.Accordingly, the Notice of Motion dated 27th January 2026 is hereby dismissed with costs to the respondent. DATED AND DELIVERED AT NAIROBI THIS 3RD DAY OF JULY 2026.D. K. MUSINGA.........................................JUDGE OF APPEALP. LILAN.........................................JUDGE OF APPEALDR. J. O. OKELLO.........................................JUDGE OF APPEALI certify that this is a true copy of the original.SignedDEPUTY REGISTRAR.